After the launch of payments bank by Airtel, Paytm is now gearing up to launch its payments bank. Ahead of the launch, the company has raised around Rs 220 crore in funding. Notably, Paytm was among the 11 recipients of the payment bank license issued by RBI earlier this year.
Out of those Rs. 220 crore raised by the company, Paytm’s founder Vijay Shekhar Sharma has revealed that he himself has invested Rs 112, while the rest of the money comes from other investors via One97 Communications.
As per Sharma, the initial investment in the company could go as high as Rs 400 crore, which will be deployed in tranches. Paytm was planning to launch its payment bank service by November, however, the launch is getting delayed. Commenting about this, Vijay Sharma said that the delay is due to the pending approval from RBI.
Since payments banks are not allowed to lend money themselves, the company is betting on selling products such as loans, insurance, and wealth management in order to drive revenues. Apart from paying interest on money in payments bank accounts, Paytm is also going to do away with the merchants charge. This means merchants will be charged nothing when they transfer money from their current accounts to the company’s payments bank accounts.
Paytm Payments Bank’s initial plan is to cover twelve cities in north-east and central India. Later, the company will look at the western and southern regions. Vijay Shekhar Sharma is expecting the payments bank service to start making money in three to five years.
While Paytm’s payments bank is yet to launch, Airtel has already launched its payment bank pilot service in Rajasthan. Deposits made by the user in savings accounts will be eligible for an interest rate of 7.25 % per annum. However, no such information about Paytm’s payments bank service is available as of yet.
Apart from Paytm and Airtel, other who have got the license for the banking service from RBI include Vodafone, Reliance Industries, Idea Cellular, Paytm, FINO Paytech, India Post and National Securities Depository Limited.